Future Optimistic For Chinese-controlled Hong Kong

February 07, 1997|By Robert Samuelson. Washington Post Writers Group.

HONG KONG — You quickly discover here a strong consensus about what will happen when China resumes control July 1: almost nothing. Business will still thrive; Hong Kong's 6.3 million people will still enjoy personal liberties closer to Britain's than China's. The recent proposal from China to curb some freedoms (the right, for example, to demonstrate without police approval) triggered diplomatic protests, but it didn't deflate the local optimism. Since year-end 1995, the stock market has risen 34 percent. Real estate prices are up. More people are moving in than out. Although this confidence may prove naive, it seems genuine.

"Hong Kong people are practical--they want to make money and have a rising standard of living," says Robert Ng, head of Sino Land, a large real estate developer. Ng's betting on it. His company recently bought a major hotel and office building. Public opinion supports the handover--with some anxieties. The Hong Kong Transition Project finds that 48 percent of the population favors reunification, though big minorities support remaining a British colony (18 percent) or becoming an independent nation (17 percent). Project director Michael DeGolyer says that specific worries--about repression and corruption from China--have grown. Still, two thirds of respondents express optimism that the transfer will go smoothly.

One reason is that the change merely formalizes a process under way for decades. Hong Kong is not now--if it ever was--a British cultural enclave. "This is a Chinese city," says one British journalist simply. British expatriates constitute less than 1 percent of the population, which has tripled since 1950. This has diluted British influence, while prosperity has expanded the Chinese business elite.

There is an almost palpable eagerness to take control. Listen to Anthony Neoh, a lawyer who belongs to both the U.S. and British bars and heads the Hong Kong Securities and Futures Commission. "When I think of 1997, I don't just think about Hong Kong," he said in 1996. "I also think about China, its reunification and the Chinese race. People are still very patriotic, even here, and that helps us to forget about the present problems and antagonism."

What reinforces this feeling is self-interest: Hong Kong's economy is now completely intertwined with China's. This was not true 20 years ago. Hong Kong had built its success on inexpensive exports--clothes, toys, electronics. But since the early 1980s, when China began its economic reforms, Hong Kong companies have moved hundreds of plants to the mainland to take advantage of low labor costs. In adjoining Guangdong province, Hong Kong-controlled companies employ an estimated 4 million workers.

As a result, Hong Kong is now mostly a service center for China. It is the world's largest container port, and Hong Kong firms design and market products made in China. Hong Kong's re-exports--goods generally shipped to and from China--now total five times its own exports. Manufacturing represents only 9 percent of the city's output (gross domestic product). To challenge the handover might jeopardize this prosperity.

Of course, that could happen anyway. If the political climate sours, it could trigger an exodus of people or businesses. The Sino-Anglo Agreement of 1984 that set the terms for the transfer reflected Beijing's policy of "one country, two systems" for 50 years. China would control defense and foreign affairs, while allowing Hong Kong to maintain its own laws, courts, currency and passports. But there are no guarantees. After the transfer, China can effectively do anything.

There are reasons it might not do much. It needs Hong Kong economically and sees the special relationship as a model for Taiwan: another bit of territory China is determined to reclaim. Against this logic is China's intense fear that Hong Kong will become a breeding ground for subversion. Britain and China have feuded over charges that one of them is breaking the original agreement. Britain, for example, expanded popular voting for the colony's Legislative Council. China then rejected the legitimacy of the new legislature, naming a provisional legislature until new elections are held in 1998.

Britain's protests would carry more moral weight if its colonial performance had been better. It has not run a democracy in Hong Kong. The first (partial) popular voting for the legislature didn't occur until 1991--150 years after Britain seized Hong Kong. The recent laws being proposed for repeal are intended to restore the same repressive colonial laws that existed through the 1980s. Still, this could be a portent of worse to come: censorship, rigged election laws.

Whatever happens, the symbolism of the transfer is undeniable. A century ago, Britain was the world's greatest power with an enormous empire. Now China is emerging as one of the great powers of the 21st Century. The royal yacht Britannia is being dispatched to fetch the departing governor. The trip will be its last before being decommissioned.